The management of Oando Plc, says it has developed strategies to return the group to profit, pay its debt, improve working capital and cash flows as part of ensure it is able to propose a dividend as soon as practicable and for the good of shareholders.
Such key strategic initiatives developed to return the group to the path of prosperity, profit and improve working capital and cash flows, were listed as: restructuring “the Reserve Based Loan and Corporate Loan Facilities at Oando Energy Resources.
It will therefore ensure that the loans become not only default free and fully comply with credit agreements, besides achieving “a tenor extension of up to two years, and reduce debt service requirements in the near term.”
The net effect of the initiative, Oando Plc management assured, “will be to reclassify up to N117 billions of current liabilities into long-term liabilities thus creating a substantial remedy to the negative working capital position.”
Implementation of this initiative, it recalled, started in 2016 and will be completed between April and June this year; in addition to the planned refinancing of approximately N9bn credit facility provided by one of its bilateral lenders.
Oando Plc says it would sell its stake in Oando Energy Resources, a move expected to raise up to N84bn this year also “in order to prepay debt across the Group.”
It will be complimented with the sale of 25% stake held by Oando Plc in Glover BV, expected to fetch up to N24bn over the next 18 months, proceeds of which will be used to make repayment of principal of debts across the group.
This is in addition to raising capital N18bn via private placement by December 2020.
All of these initiatives, Oando Plc added, “are expected to improve the profitability of the group through interest savings arising from repayment of borrowings.”
According to its audited financials for the year ended December 31, 2017, Oando Plc reported comprehensive losses of N30.6bn, up from N28.1bn in prior year; despite a net profit of N19bn during the period.
In a note to the account on the group’s going concern basis, the managed also noted the net liabilities of N10.5bn, compared to the net assets of N18.1bn in 2016; following which the group’s reported net current liabilities stood at N293.1bn, from net current liabilities of N263.8bn in prior year. These, it noted further, “indicate the existence of material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern and, therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business.”
Meanwhile, a statement by Ayotola Jagun, Company Secretary and chief compliance officer of Oando Plc, which followed the release of its 2017 full-year audited result by Oando Plc, quoted Wale Tinubu, its Group Chief Executive, as describing the 2017 full year as an important and positive milestone for the Company.”
Also important, Tinubu added, was “the continued strengthening of our business model through the effective implementation of our strategic initiatives of Growth through our dollar earning upstream portfolio; Deleverage through asset divestments and the expansion of our oil export trading business.
“Against this backdrop we experienced challenges; the most significant being the Securities and Exchange Commission’s (SEC) investigation into the Company which led to the technical suspension of free trading of our shares on the Nigerian and Johannesburg Stock Exchanges and the instituting of a forensic audit; we have and continue to provide full support to the SEC and are hopeful of a smooth and speedy conclusion. We have commenced 2018 buoyed by our unrelenting commitment to our strategy and remain confident in its success.”
Photo Caption: Oando Plc’s chairman and Alake of Egbaland, Oba Adedotun Aremu Gbadebo, with Jubril Adewale Tinubu, Group Chief Executive of the company during the commission of the new head-office complex on Ozumba Mbadiwe Street, Lagos.
